Member Info for Tornadotony

In 15 weeks there will be no glut on oil. It only takes a flare up near Iran and we have $80-$90 oil price per barrel. Apparently 800 PE rate for Tesla for a product most can not afford is really good value according to the privileged elite on Bloomberg and they think oil at 8 PE on average is overrated. Strange world if you live in a bubble and do not face reality.

Tullow valued its Kenya asset at $640M. April 2020.

Fire sale metrics.

Tullow share only is;

Value for grade 1C oil = $180M 2C oil = $280M 3C oil = $60M Grand total = $520M Achieves sales target. This is asimilar to hit Uganda sale.

The audit is useful in that identifies at what point is CGT due on the sale price.

Tim,

The production guidance. The problems with Enyenra field require a far better map of where to drill precisely. Sinking a well 20 metres away from an ideal vertical an creating problems costs $50M. On top of that it wipes out say 6,000 barrels of oil of expected production. I suspect it was this issue in particular that cost the previous CEO Paul McDade his job. The loss of 12,000 barrels is from 2 Enyenra wells plus a couple more they may have gone on to drill.

When they resolve Enyenra drilling site issues and reserves have been partly rebuilt in TEN from resources then production could be 82,000-83,000 and hit and that was one of the metrics for delivering $175M FCF. The priority was Ntomme-9 and resolving Jubilee issues first.

It has done on 6th, 13th and 20th of August. I see no reason why the pattern should change. (We get sell off Mondays).

Hi Tim

3 issues were raised with Enyenra. The first is that the Enyenra oil field is not completely continuous and it has a few disconnections. The second issue is that Enyenra-14 well could not go down vertically into the reservoir. It was necessary for the company to pursue deviated drilling which means to divert the angle to get the correct positioning in the reservoir. This is an angled partial horizontal drilling and the company got into all kinds of mechanical issues in trying to do it and then decided to suspend the operation of that particular well. The third issue was that as where parts of Enyenra approach closer to Jubilee it is suspected to be less sand rich on the sub-surface. In essence the field requires a more intelligent and informed work up to extract oil more efficiently and avoid the need for any deviated drilling.

All the above comments were in public domain which I have just requoted for the most part and some are from other oil companies who know that basin or operate in nearby blocks.

Impairments and Capex are past history and known and may well be priced in. However, we do not know what we don't know.

TimmyG

I believe the Uganda sale is going to happen soon. It may not complete 9 Sept but Total made it clear it has to complete by 23 October and in principle the Uganda government agreed that time line. Uganda Gov also know Tullow have another RBL to get through end of next month.

None of us here have inside info but Tullow followed RDSB share price from 1 January to 22 July. It has dropped back deeper since but has a tendency to rebound more strongly when we have upside.

To answer Tim's 3rd question, I believe the cost reductions and interest reduction achieved on paying off the Uganda sale to reduce debt deliver $5 a barrel off costs. By reversing the drill contract for TEN and Jubilee, this would allow 3 to 4 wells per annum converting resources into reserves and continuing with field life. Its possible for the Ghana fields to run for 14 years or so.

Tim's finance questions rely on answers from on what the new RBL arrangement would be. Debt can be extended out to 2029 and be shaped by a different repayment profile. What we cannot have is an endless run on $45 a barrel and neither can the entire oil sector. In 15 weeks a supply glut is over and using a virus to stop consumption and control populations may not work as the life being offered for many is worse than the other consequences.

Hi Tim

What we write on here it is probably visible to the Kenya Government along with the short brigade. I can answer all the questions, but holding off for the time being. Like many others I have added more above 22p. Tony

A lot of investors have not worked in a public sector regulatory outfit. The first difference is a very high level of documentary control. The entire organisation will be highly structured with a chain of decision making commanders. All processes are quite formal and each stage takes time for checking and approval across numerous specialists and the organisation often acquires specialist feedback elsewhere. Judgements are usually not subject to seduction by a personal view. These organisations will focus on public benefit and safety. They are not run by specialist advisors in cabinet, they are not run by scientifically ignorant staff. They are focussed on following the rules and getting it right. They are not perfect and sometimes things get amended and corrected, but new staff learn that getting simple things right is important nd that everything ha to be thorough. I am sure Synairgen is being treated fairly.

It is a case of believing in the product or you don't. Its a case of whether the product has unique step improvement in a healthcare pathway or it doesn't. The final issue is route to market but that follows later on.

Tim,

Thanks for your Kenya comments and your right CNOOC is an important party in all of it. The Maersk reported that the vessel stayed on later for some re-drilling. It was at flow testing stage. I just wish they would issue an RNS to say well is in operation but it looks as if we have to wait until 9 September. I do hope we get a presentation and Q and A later that day.

I believe Rahul was brought in to work with Kenya Government and if he succeeds on this alone in the coming year, he is worth every penny and bonus he gets if he turns it all around there. August was going to be poor for the entire oil sector. I believe the future curve is turning upwards for oil. Tullow is probably trading below its real enterprise value.

Yes it will but needs time to resolve. The key is a head of principles meeting with Kenya president.

outofideas

Rahul has been in the job 7 weeks, he has been evaluating the people around him. The Uganda asset sale will go ahead an give the company some precious time. He has to do the Suriname drill as its a case of following the Jamaica licence if he doesn't. He has overseen re-drilling of a rig so they get it right in Ntomme-9. They are still cost cutting and making folks redundant. Kenya has been reactivated and a lot of talking is going on to validate project costs to date. The Kenya government have not progressed their side of the bargain and need to see the downside of that's as Uganda races ahead of them and gets market share. So Rahul is not some kind of colonist he will say look at India growth and Uganda developments and so do they want constructive progress or not. Its not something he can RNS or talk about in public but I am sure diplomatic style discussions are going on as both sides do not want to waste time with solicitors and pointless claims in a court. The government has not bought areas needed for land access and water supplies to the oil field. They have not resolved infrastructure at the export port terminal. I am hoping Rahul cuts through all the nonsense. I hope Total CEO joins him in the Kenya discussions.

Another incredible gift. Unfortunately my 190 order did not get hit so far. Now my 4th biggest equity holding.

4.5M barrels up from 4.26M last week. Another useful drop towards levelling up supply and demand. 15 weeks of this and no more glut. Oil curve should then move to $50 plus.

Another matter to add for the 9 Sept is progress on cost cutting.

To have Tesla at 1000 times PE earnings from current 800 and BP pushed below 8PE. 72% of oil production has nothing to do with cars. Bubble or something given away like a gift.

Rahul needs to deliver a presentation, we need a credible story. End of September he will be 3 months in and needs to demonstrate his skills and vision.

The commodity they sell higher, more share buying and selling and SP down on the day. This is a motley fool day where everything is just made up.

$46.25 on futures. This is way above the forward curve price. They are holding above $51 a barrel and doing better than breakeven.